Markets to watch - Mexico and Cuba

Posted on 18 December 2012 by Douglas Chadwick

Back in October we discussed the potential for gain by investing in an ETF covering the Mexican stock market. Anybody that did that would now be showing a profit. It is however flat lining at the moment as it waits to see the resolution of America`s fiscal cliff problems. Mexico is very dependent on the demands of it's big brother to the North. It does however have a lot of advantages. A strong government willing to liberalise the economy and a young competitively priced labour force with manufacturing skills to take advantages of these reforms. So in the near future, with a positive move to resolving the fiscal cliff, we could see the Mexican stock market take off again.
 
Another country worth watching that is not so far away from Mexico is Cuba. Fidel Castro has released governmental control of Cuba to his brother Raol, and he would seem to be turning back the clock on some of Fidel`s communist dogma that has brought the country into financial destitution and ruin. Some of the changes that are taking place are the introduction of a certain amount of capitalism for people to sell their own goods and services. Farming and tourism will benefit from these changes. But the major change is coming from the loosening of the American fifty year embargo on trade with Cuba, and the freedom for Cubans exiled in Florida to visit their relatives in Cuba. These people have a lot of money and in the future, if they were able to return and invest in the Cuban economy, this country will take off. The areas which will benefit are the construction industry and all associated businesses. Tourism and the hotel industry would be a close second, and off course any airlines flying these same people and cargo. There is no obvious route to invest directly into the Cuban market as no stock market exists. But it must be worth looking in the future to see which emerging market funds start to buy into the companies that will eventually benefit from these changes.